Must make three payments then you can refinance?

[DevinB]

Funny, I agree that refinancing after 6 months into the same term loan is not advantageous unless there’s a big enough interest rate reduction.

But, if you refi before the first payment is due, just about any reduction in interest rate will result in less total interest paid.

Yes, if you refi a 60month loan after 6 months into a 60 month loan, you may wind up paying more total interest, or you may not, depending on the reduction in rate. If you refi after 6 months into a 60 month loan, you’ve effectively turned it into a 66 month loan, I get it. Which means you’d need a larger rate reduction to make it worthwhile. Maybe the more accurate platitude would be “The sooner, the better, but if you wait too long, don’t”

My example isn’t representative, but I went from a 4% 72mo dealer loan to a 2.24% 60 mo credit union loan, 10 days in. Several months later, i refi’d that loan into a 1.79% / 60mo. Normally would not be worth the effort, but I kept the same payment amount. This reduced my net cost, all with one phone call.

I wonder,if it was 4%/72mo going to a 1.79%/72mo, after how many months would switching actually increase total interest ?

"But, if you refi before the first payment is due, just about any reduction in interest rate will result in less total interest paid." <--absolutely agree, def. the way to go if possible and better rate found.

"My example isn’t representative, but I went from a 4% 72mo dealer loan to a 2.24% 60 mo credit union loan, 10 days in. Several months later, i refi’d that loan into a 1.79% / 60mo. Normally would not be worth the effort, but I kept the same payment amount. This reduced my net cost, all with one phone call." <--that's awesome. If you're able to keep you previous/higher payment in a refi and pay-down the balance faster, even better.

"I wonder,if it was 4%/72mo going to a 1.79%/72mo, after how many months would switching actually increase total interest ?" <--best way to compare those things is to nerd-out a bit and make an excel sheet with that EMI formula baked into it, or you could just trial-and-error with some online calculators. My nerd sheet from years ago says...41 months. 1.79 is so much better than 4 at a 72mo term that you'd need to go 41 payments at 4%, then refi at 1.79% for another 72mo....then total interest would be increased by ~ 38 bucks. Anywhere from 1 to 40 months it makes more sense to refi in this particular example. $78,852 or $8,852 total interest for the 4%/72mo loan to completion. $78,890 for paying 41 payments of $1095....then refinancing a remaining balance of $32,204 at $472/month for another 72mo.

Let's hope no one ever did such a thing...

 

[nburd]

If there is no language in the contract stating they can come after you for that discount/rebate, then there is nothing they can actually do if you refinance early. I read and am told its usually an honor system. If you like the dealership, they treated you well; wait until after the 3rd payment clears before refinancing. If you were treated poorly, review the contract and (assuming no negatives are found) refinance early.

Thats what I'd do, anyway, assuming I hadn't walked out for being treated poorly.

Exactly. I saw nothing in my contract, called the finance company to confirm, I was told the same from the dealer and refinanced in 3 days after I got home. Scoundrels!

 

[dano257]

I was told the same thing by the dealer about having to make 3 payments. I was not happy with the overall experience at the dealership. They made a few attempts of changing some numbers and adding things. I refinanced the loan the next week with no issues. My small attempt at "getting even"...

 

[KMach]

What happens if there are multiple liens on the title? The finance guy at my dealership mentioned something about the title if I refi too soon. I ignored him and had the loan paid off the day before the first payment was due to Chrysler Capital.

Nothing really. It is just another lien release you need to keep track of when you want to get rid of the truck. If you dont have them on file you cant sell it until you get a release. So having a title with only the current lendor named is much cleaner.

 

[jimbotron]

Told the same thing when I bought my 20 limited - three payments then refi. Instead, I called AAA and refinanced within the week. Ended up getting a crazy low rate of 2.49% and they were a pleasure to work with. Can recommend the guy I worked with directly for AAA northeast if anyone's interested - just send a PM.

 

[slatersan]

All this talk of refinancing a car loan and how quickly to do it makes me ask....

Is $500 worth all of the trouble?

 

[Big Tup]

I recently purchased a 21 Longhorn Limited 10 year anniversary edition. When I went to the finance office they told me that there was a problem with my Social Security Number. I have a 861 credit rating and wanted the 0% financing that Chrysler Capital was offering. I was not able to get that rate because of the so called problem with my Social Security Number. I had to settle for a 4.49% rate and when I balked at that rate the finance office told me that I had to make three payments and then I could refinance. Has anyone had this situation happen to them? Do you have to make three payments and then you can refinance?

While the three payments requirement may seem suspect, it is indeed the terms of the agreement. The zero % financing is ultimately "built into" the price of the truck, that is why it typically only applies to certain vehicles. If you had 0% financing, why would you refinance? What rate would be better than 0%. Many people take this offer and then pay the loan off after 3 months, this way they can get the better price on the vehicle. You should ask if your cost of the vehicle could be lower, if you choose your own financing. Sometimes they may say "actually the cost is higher if you dont use our 0% financing"; which then will tell you that it really isnt a "no cost" financing. The other thing that happens is credit scores may not b good enough and they end up charging you a little higher interest. At this point, many folks say "what's a few more bucks" and move forward with closing the deal. I would challenge the "social security" problem and ensure you understand exactly what is wrong with the social security problem.

 

[Wsmith]

Like everyone else said, you got screwed by the dealer, go immediately to your financial institution and refinance. I waited about eight months to refinance as I am lazy and my dealer was decent to me. When I dumped Chrysler Capital and went to my credit union I went from 3.35% to 1.74%. As soon as the payoff letter is available online make the switch. This might take a week or two. If you have not encountered any SS# issues in the past, your dealer 100% hosed you, hose them back.

 

[Aseras]

All this talk of refinancing a car loan and how quickly to do it makes me ask....

Is $500 worth all of the trouble?

If you make more than $500 an hour, no.

 

[GFK51]

Like everyone else said, you got screwed by the dealer, go immediately to your financial institution and refinance. I waited about eight months to refinance as I am lazy and my dealer was decent to me. When I dumped Chrysler Capital and went to my credit union I went from 3.35% to 1.74%. As soon as the payoff letter is available online make the switch. This might take a week or two. If you have not encountered any SS# issues in the past, your dealer 100% hosed you, hose them back.

Yes, I did get hosed by Koons RAM in Tysons Corner, VA. Worst buying experience of my life. I have since refinanced and believe it or not the credit union I used did not have a problem with my Social Security Number, imagine that.

 

[ElkoNV]

Yes, I did get hosed by Koons RAM in Tysons Corner, VA. Worst buying experience of my life. I have since refinanced and believe it or not the credit union I used did not have a problem with my Social Security Number, imagine that.

Sorry you had such a negative experience. Thanks for sharing, I know I learned a thing or two and I am sure the information in this thread will benefit future buyers.

 

[PurpleRT]

Smdh... it’s amazing how much Koon Tyson comes up when looking for a dealer just to read the several horror stores on dealerratings about them. I was so close to buying a used scat pack from them this week until I did my research. I dodged a bullet.


Sent from my iPhone using Tapatalk Pro

 

[slatersan]

If you make more than $500 an hour, no.

Having never refinanced a vehicle, I imagined it was more time intensive than an hour.

 

[kenthelawnguy]

i was pre approved at 2.9% but to get an extra 500 off i had to finance through FCA. Of course they told me that they have higher interest rates at 5% but i played the game to get the 500 off. I was told i had to make 3-4 payments as well. I looked my contract over and it states in black and white that no penalties if paid off in full at anytime. So as soon as I got home i called my bank and as soon as they got the pay off I re financed before my first payment was due. Never got a fee or hey you owe us 500 or anything. Yes, it is a scam from the dealer to tell you this.....

 

[DSTJ99]

My dealer required me to use their bank to get an additional discount. They didn’t put anything in writing about waiting a certain period and barely mentioned it at signing.

I just refinanced after 60 days with American1 credit union at 1.9%. Online application and few emails later all was complete. Doubt it took more than hour total and I was not a member with them or in their area.


‘21 1500 Ltd, Max Steel / Indigo Frost

 

[User_3336]

My dealer required me to use their bank to get an additional discount. They didn’t put anything in writing about waiting a certain period and barely mentioned it at signing.

I just refinanced after 60 days with American1 credit union at 1.9%. Online application and few emails later all was complete. Doubt it took more than hour total and I was not a member with them or in their area.


‘21 1500 Ltd, Max Steel / Indigo Frost

If they weren't using Chrysler Capital for the extra $500, they must have given you an extra $500 extra off the price (((dealers LOVE to switch numbers around))). Dealers most certainly get more "kickbacks" when they use their "their own choice of banks".....

 

[User_3336]

While the three payments requirement may seem suspect, it is indeed the terms of the agreement.

NO, it is most certainly NOT! (at least with Chrysler Capital). All one has to do is read the back of the contract.

 

[Aseras]

Having never refinanced a vehicle, I imagined it was more time intensive than an hour.

It's even easier with Covid. if you are refinancing with your bank or CU, you can do it all online and just return the forms by mail. No need to even bother going in to sign. refi's are way more straightforward than a new loan. and if you do it "fast" enough it doesn't even count as a new credit pull/hit for your score, and the paid tradeline boosts your score more than the knock for the lower average age of accounts. another reason to do it ASAP and not wait on dealer shenanigans.

 

[jimbotron]

It's even easier with Covid. if you are refinancing with your bank or CU, you can do it all online and just return the forms by mail. No need to even bother going in to sign. refi's are way more straightforward than a new loan. and if you do it "fast" enough it doesn't even count as a new credit pull/hit for your score, and the paid tradeline boosts your score more than the knock for the lower average age of accounts. another reason to do it ASAP and not wait on dealer shenanigans.

Exactly right. I spent maybe 20 mins on the phone with the AAA refi guy, he emailed me some forms, I docusigned them, and had to return one form by mail for the state of MA. Well worth it.